Short sales are becoming even more common nowadays and keywords like “bank approval required” is being seen more frequently in the description.

A short sale is actually not simply a sale of a property for less than the original purchase price. A short sale is a pre-foreclosure only because the lender has decided to receive payment on the note for less than the face amount. The sellers have come to a realization that they will not be able to get as much for the house as they owe and they can no longer stay in the property for a variation of reasons. The terms of the sale differ from each lender and require the owner to demonstrate that they can no longer afford payments on the house and there is no money on the table to make up the difference.

It can be a sticky situation for sellers/homeowners since they do not want to hurt their credit or go into foreclosure but they have to sell the house because they have transferred, took a new job, lost a job, or are overextended and most times don’t have the cash to pay the marketing costs, closing costs and pay off the mortgage.

There are some easy and tough short sale deals, in which the lender calculates that they’ve lost too much money already and just want to wait out the buyers until one comes along who’s willing to buy the house with no closing costs.

Here are some tips to keep in mind:

• Be patient. The lenders are typically inundated during this time with many of these types of properties and your offer may be one of many. Don’t expect a response within a day or even 2 or 3 days. Sometimes it will take longer than a week.
• Good comparative market analysis (CMA). Be sure to hit the price on the head and offer to close it. Most lenders have already lost enough money and don’t want to lose much more with a really low offer. If it’s overprice, offer the CMA amount.
• Pile on contingencies. If you are writing a full or lower price offer, make sure to include all contingencies including inspections, appraisal, financing, etc. Ask for a lot.
• Be on top of your walk through. Test all the systems (electrical, plumbing, heating/air) and turning on the furnace/heat/air.

If you are on the other side of the table, selling the short sale…keep ni mind that you are no longer in control anymore. The buyer/agent is going to be dealing with the listing agent and the lender more than anyone else.